Asymmetric Information and Rationalizability
AbstractWe study how asymmetric information affects the set of rationalizable solutions in a linear setup where the outcome is determined by forecasts about this same outcome. The unique rational expectations equilibrium is also the unique rationalizable solution when the sensitivity of the outcome to agents' forecasts is less than one, provided that this sensitivity is common knowledge. Relaxing this common knowledge assumption, multiple rationalizable solutions arise when the proportion of agents who know the sensitivity is large, and the uninformed agents believe it is possible that the sensitivity is greater than one. Instability is equivalent to existence of some kind of sunspot equilibria.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by HAL in its series Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) with number hal-00780372.
Date of creation: 2013
Date of revision:
Publication status: Published, Economic Theory, 2013, Published online 11 Décember 2012
Note: View the original document on HAL open archive server: http://hal.archives-ouvertes.fr/hal-00780372
Contact details of provider:
Web page: http://hal.archives-ouvertes.fr/
Asymmetric information; common knowledge; eductive learning; rational expectations; rationalizability;
This paper has been announced in the following NEP Reports:
- NEP-ALL-2013-03-16 (All new papers)
- NEP-CTA-2013-03-16 (Contract Theory & Applications)
- NEP-GTH-2013-03-16 (Game Theory)
- NEP-MIC-2013-03-16 (Microeconomics)
You can help add them by filling out this form.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (CCSD).
If references are entirely missing, you can add them using this form.